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NEWS

WASHINGTON, D.C.--Environmental and public health advocates pressed the
Environmental Protection Agency to regulate greenhouse gas emissions from
existing power plants during a May 24 hearing on a proposal to limit carbon
dioxide from new fossil fuel-fired units.

EPA proposed carbon dioxide limits April 13 for new fossil fuel-fired power
plants, but the proposal exempts existing and modified sources.

At the hearing at EPA headquarters, Paul Billings, vice president of policy
and advocacy at the American Lung Association, called EPA's proposal “an
important first step” toward regulating greenhouse gases. However, he urged
regulation of existing sources as well.

Darin Schroeder of the Clean Air Task Force also pressed EPA to act on
existing power plants. Administrator Lisa Jackson said when the rule was
proposed that the agency has “no plans” to do so in the immediate future.

Existing power plants account for “the bulk” of carbon dioxide emissions,
Schroeder said. “We look to EPA to take much-needed action to reduce
CO2 emissions from existing sources as a next step,” he said.

The vast majority of testimony at the hearing came from environmental and
public health advocacy groups. EPA held a second hearing on the proposed rule in
Chicago May 24.

Only New Plants Covered by Proposal

The new source performance standards proposed April 13 under Section 111 of
the Clean Air Act would limit all new fossil fuel-fired power plants to 1,000
pounds of carbon dioxide per megawatt-hour (77 Fed. Reg. 22,392; 71 WCCR,
4/12/12).

New combined-cycle gas power plants would be able to comply with the proposed
standard with no additional controls, EPA estimates. New coal-fired power plants
would be required to invest in expensive control technologies such as carbon
capture and storage. The proposed rule would amend 40 C.F.R. Part 60.

EPA does not anticipate that the rule would significantly reduce carbon
dioxide emissions from power plants because the industry has been trending
toward cleaner-burning natural gas already.

The agency agreed to issue the power plant rule as part of a 2010 legal
settlement with the Natural Resources Defense Council, other environmental
groups, and some states (New York v. EPA, D.C. Cir., No. 06-1322, 12/23/10; 250
WCCR, 12/23/10).

EPA Approach 'Fatally Flawed.’

Jim Hunter, director of the utility department at the International
Brotherhood of Electrical Workers, called EPA's proposed standard “fatally
flawed” because it does not differentiate between various fuel types.

“EPA has a 40-year history of setting separate new source performance
standards for steam electric generating units, and there is no reason to depart
from this tradition,” he said.

Scott Segal, executive director of the Electric Reliability Coordinating
Council, a power utility trade group, also said EPA's approach has “substantial
legal shortcomings” because it treats all power plants the same, regardless of
fuel type. Segal said EPA's proposal improperly treats natural gas as a
performance standard rather than a fuel, using that as a benchmark for other
fuel types.

EPA's proposal would require that coal plants operate like natural gas
plants, said Alex Bond, director of air quality at the National Mining
Association, according to a written copy of his remarks. However, the proposed
rule essentially requires no controls for new gas facilities. If carbon capture
technology is a viable approach for reducing emissions from coal-fired plants,
it should be required for natural gas units as well, Bond said. However, until
the technology has been demonstrated to be commercially viable, EPA should not
require carbon capture to be used.

“If CCS becomes commercially viable in the future, there is no reason to
believe that it would not be available for [natural gas combined cycle] units as
well, and then the agency would be able to conduct a rulemaking to set
appropriate NSPS across both source categories,” Bond said. “Until such a time,
it is reckless for EPA to pursue this rulemaking.”

Carbon Capture Viability Questioned

Industry groups and unions also disputed EPA's assertion that carbon capture
will be technologically and economically viable within the next 10 years, as
envisioned by the proposed rule.

Segal said the technology has never been deployed at a commercial scale,
“even with substantial government subsidies.”

Hunter recommended that EPA repropose the rule, setting different performance
standards by fuel type and removing the requirement that new coal-fired power
plants install carbon capture and storage technology.

“CCS has not been commercially demonstrated at utility-scale applications in
this country, and the technology is not economically feasible in the absence of
a carbon market, bonus allowances, or similar methods to offset its additional
costs,” Hunter said.

EPA did not require carbon capture as part of its greenhouse gas permitting
program. Instead, it simply required that the technology be considered when
determining required controls, Hunter said.

Combined with other EPA rules limiting emissions of toxic pollutants and
interstate transport of nitrogen oxides and sulfur dioxide, Segal said EPA's
proposal will force some coal-fired power plants to close.

“All taken together, we're getting the feeling you don't like coal-fired
power,” he said.

EPA's proposal “will not drive the adoption of carbon capture and storage,”
Ben Yamagata, executive director of the Coal Utilization Research Council, a
coal industry advocacy group, said in a written copy of his remarks.

“The agency seems to argue that if coal is chosen to fuel a power plant and
there exists a CCS requirement then the regulation will actually drive
development and adoption of the technology,” Yamagata said. “That might occur if
the technology were commercially mature and other less costly fuel options were
not available. Neither of these circumstances exist.”

Instead of spurring carbon capture development, EPA's proposal would freeze
development of the technology in favor of investing more heavily in natural gas
power, he said.

“We believe that the impact of this proposal is nothing less than to stop the
development of new coal technology, deployment of coal-based capacity, and
frustrate efforts to commercialize carbon capture utilization and storage
technology,” Yamagata said.

Market Realities Drive Cleaner Generation

David Doniger, director of the Natural Resources Defense Council's climate
and clean air program, said industry groups were raising “phony arguments” when
they said EPA's proposal would force coal-fired power plants to close.

“The market realities have already driven decisions on new power away from
coal,” he said.

NRDC favors setting a performance standard more stringent than 1,000 pounds
of carbon dioxide per megawatt-hour. New combined-cycle natural gas power plants
can already achieve a lower emissions rate, and new coal facilities will emit
less if they use carbon capture systems, he said.

Doniger also rejected industry arguments that EPA improperly set a single
emissions standard for all fuel types. He said the essential function of all
power plants is the same, and power companies could choose to burn a cleaner
fuel when they build new units.

“These units perform the same function of baseload and intermediate load
power generation, and prospective builders have the flexibility to chose among
these models,” Doniger said.

Standards Could Go Further

Schroeder said it was “wise” of EPA to treat all power plants equally for the
purpose of carbon dioxide emissions, regardless of fuel type, because all carbon
should be regulated. However, EPA should also require carbon capture and storage
as the “best system of emissions reduction” under Section 111 of the Clean Air
Act, he said. Under EPA's proposal, new combined-cycle natural gas power plants
would qualify as the best system of emission reduction.

“The NSPS program is meant to pave the way toward improved air
quality--including decreased climate pollutant emissions--and is to be based on
the best system of emissions reduction,” Schroeder said.

Courts have previously required EPA to set performance standards that reflect
emission reductions reasonably projected to be achievable in the near future
rather than simply requiring the best controls available at the time, he
said.

EPA will accept comments on the proposed rule until June 25. Comment can be
submitted at http://www.regulations.gov
and should reference docket No. EPA-HQ-OAR-2011-0660.

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